Constructive Trusts – A Remedy for Unjust Enrichment in New York

When people entrust others with their property and are taken advantage of, they may seek to remedy the wrongdoing through constructive trusts.

Sometimes, people in New York and elsewhere may put family members, friends or other acquaintances in control of their property. When placing such trust in others, they generally expect them to act in good faith. Unfortunately, however, some people may take advantage of such a situation and unjustly benefit. In these types of cases, they may seek to have the wrongs redressed through the imposition of a constructive trust.

What is a constructive trust?

When most people think of trusts, they think of the legal tools used to control, protect and transfer their property and assets. Not a trust in the traditional sense, constructive trusts are a legal remedy that may be imposed by the court when one person is receiving unjust enrichment through the use of property that rightly belongs to another. They may be used to see the terms of certain verbal agreements legally upheld. Through the imposition of constructive trusts, people may be ordered to transfer the property back to the rightful owners. Further, they may be prevented from unjustly enriching themselves through the inappropriate use of another’s property.

How are constructive trusts used?

Constructive trusts may be sought as remedies to a range of estate and property disputes. They are typically used in circumstances when people acquire the legal title to a property, and deprive the rightful owner of the benefits of the promises that were made between the parties that served as the reason for the transfer itself. For example, a mother agrees to transfer the deed to her house to her daughter in order to help avoid a drawn-out probate process down the road or to “protect” the property from Medicaid or a nursing home. In exchange, the daughter agrees to let her mother continue to live there notwithstanding that she is no longer the legal owner. After transferring ownership of the home over, however, the daughter decides to she wants to sell the home or evict the mother if she does not pay rent to live there. The mother may challenge the daughter’s actions through the invocation of a constructive trust.

What is unjust enrichment?

Unjust enrichment occurs when one person benefits at the expense of another under circumstances that the law deems unfair. For instance, if the sale of the home where to have gone through in the previous example, the daughter may be viewed to have unfairly benefited from it. Consequently, the mother may be entitled to restitution, including the proceeds from the home’s sale. To prove unjust enrichment occurred, people may have to show that the defendant benefited at their expense and that the act necessitates compensation.

Working with a legal representative

Understanding when constructive trusts may be applicable and how to seek their implementation may be complicated for people in New York. This may make already challenging situations involving property disputes between family members all the more difficult. Therefore, those who believe someone else is unfairly benefiting from their property may find it helpful to discuss their options with an attorney.